Exercise 10-25A (Algo) Determining the effects of financing alternatives on ratios LO 10-8 Clayton Industries has the following account balances: Current assets Noncurrent assets $ 17,000 82,000 Current liabilities Noncurrent liabilities Stockholders' equity $ 14,000 51,000 34,000 The company wishes to raise $31,000 in cash and is considering two financing options: Clayton can sell $31,000 of bonds payable, or it can issue additional common stock for $31,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required 8-1. Compute the current ratio for Clayton's management (Round your answers to 2 decimal places.) Currently If bonds are issued If stock is issued Current Ratio to 1 to 1 to 1 6-2. Compute the debt-to-assets ratio for Clayton's management (Round your answers to 1 decimal place.) Debt to Assets Ratio % Currently If bonds are issued If stock is issued % b. Assume that after the funds are invested, EBIT amounts to 516700. Also assume the company pays $3,600 in dividends or $3.600 in interest depending on which source of financing is used. Based on a 40 percent tax rate, determine the amount of the increase in retained earnings that would result under each financing option Additional Retained Earnings Bonds Stock